In-service withdrawal types and terms
If you’re an active federal employee or a member of the uniformed services, you can make two types of in-service withdrawals from your TSP account: financial hardship and age-based.
Financial hardship in-service withdrawals
A financial hardship in-service withdrawal is a withdrawal that you can make from your TSP account if you have a genuine financial need.
To qualify for a financial hardship withdrawal, you must have a financial need for at least one of the following reasons:
- Recurring negative monthly cash flow
- Medical expenses (including household improvements needed for medical care) that you have not yet paid and that are not covered by insurance
- Personal casualty loss(es) that you have not yet paid and that are not covered by insurance
- Legal expenses (such as attorneys’ fees and court costs) that you have not yet paid for separation or divorce from your spouse
Additional requirements for financial hardship withdrawals
In addition to the eligibility rules, the following apply:
- You cannot withdraw less than $1,000.
- You may only withdraw your own contributions and any earnings those contributions have accrued.
- If you have two separate TSP accounts - a civilian TSP account and a uniformed services account - you can only make a financial hardship withdrawal from the account associated with your active employment at the time of your withdrawal. However, if both of your accounts are associated with your active employment, you can make a financial hardship withdrawal from each account.
When you complete your application, you will be required to certify, under penalty of perjury, that you have a genuine financial hardship.
Consequences of financial hardship withdrawals
Your financial hardship withdrawal is subject to federal income tax and, in some cases, state income tax. If you’re younger than 59½, you may have to pay a 10% early withdrawal penalty tax. Any tax-exempt or Roth contributions included in your withdrawal are not subject to federal income tax; neither are any qualified Roth earnings.
Be sure to read the tax notice Important Tax Information About Payments From Your TSP Account to learn more about the tax rules affecting your financial hardship withdrawals.
Age-based in-service withdrawals
Age-based in-service withdrawals are withdrawals that you can make from your TSP account when you’re age 59½ or older. We determine your age based on the date of birth reported by your employing agency or service. If that date is incorrect, you must ask your agency or service to change it.
To qualify for an age-based in-service withdrawal, the following rules apply:
- You can only withdraw funds in which you are vested (i.e., funds you are entitled to keep) based on your years of service.
- The amount of your age-based withdrawal must be at least $1,000 or your entire vested account balance (even if it’s less than $1,000).
- You may only take up to four age-based withdrawals per calendar year. If you have two separate TSP accounts—a civilian TSP account and a uniformed services account—you can only make age-based withdrawals from the account associated with your active employment at the time of your withdrawal. However, if both of your accounts are associated with your active employment, you can make age-based withdrawals from each account.
Consequences of age-based withdrawals
When you make a age-based withdrawal, consider the following effects on your TSP account:
- You must pay 20% federal income tax on the taxable portion of your age-based withdrawal unless unless you’re able to transfer or roll it over to an IRA or an eligible employer plan.
The tax notice Important Tax Information About Payments From Your TSP Account provides more information about the tax rules affecting age-based withdrawals.